Economic team aims to complete reform agenda before end of Duterte presidency

Finance Secretary Carlos Dominguez
Finance Secretary Carlos Dominguez. Photo courtesy of Presidential Communications Operations Office

The country’s economic managers will work until the last minute of President Duterte’s term in pushing the congressional passage of key reform measures that will support the nation’s strong and sustainable recovery from the pandemic-induced recession.

Finance Secretary Carlos Dominguez III said at a recent business forum that the Duterte administration has been relentless in pushing its “zero to 10 point” socioeconomic program, particularly the tax reform initiative, since it took office in 2016.

Dominguez noted that the Duterte administration is the first Philippine government to have successfully pushed reductions in both personal and corporate income taxes.

President Duterte spearheaded the passage of the Tax Reform for Acceleration and Inclusion (TRAIN) Law in 2018, which slashed personal income tax (PIT) rates for 99 percent of salary earners.

Dominguez said the reforms, particularly the TRAIN Law, and the government’s judicious fiscal management provided the Philippines the stamina to weather the health and economic crises unleashed last year by COVID-19.

“Our strong fiscal position allowed us to afford a responsible level of deficit spending to cover our COVID-19 response, while continuing to implement the priority programs under the 2020 national budget,” Dominguez said during a recent virtual Economic Forum hosted by the Manila Times.

Owing to government’s fiscal prudence amid the global downturn, Dominguez said that international credit-rating agencies maintained the Philippines’ high-investment-grade status, which then  allowed the government to borrow at cheaper interest rates and longer payment terms.

As our credit ratings remain better than our peers, we continue to have good access to official development assistance (ODA) and external commercial loans,” the Finance chief explained.

To help in revitalizing local businesses, Dominguez said the Duterte administration also pushed for the immediate passage of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act and the Financial Institutions Strategic Transfer (FIST) measures.

Dominguez said that CREATE, which was signed into law in Marchwill unleash the biggest stimulus ever for businesses through lower corporate income tax (CIT) rates and provide flexible investment incentives especially to the kind of investors that the government wants to set up shop here.

“With CREATE, we are leaving the money in the private sector’s hands to revitalize their businesses. We trust that enterprises will re-invest their tax savings from CREATE back into the economy to spur domestic activity and create more jobs for our people,” Dominguez said.

Meanwhile, Dominguez said the President has timely signed into law the FIST to support the banking system in efficiently mobilizing savings and investments as well as extend more loans to micro, small and medium enterprises (MSMEs).

“By its timely enactment, FIST will effectively help more banks facing delayed loan collections to drastically reduce their growing non-performing loan ratio,” Dominguez said.

Apart from FIST, Dominguez said the government is pushing the passage of the Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery (GUIDE) bill.

Once enacted into law, he said, the GUIDE will help the government in saving strategically important companies by aiding them to address their solvency issues resulting from the COVID-19 economic shocks.

Along with the GUIDE bill, Dominguez said economic managers will pursue other urgent economic measures before the 2022 national elections period starts.

These proposed legislative measures include GUIDE along with the bills seeking to amend the Foreign Investment Act, Public Service Act and the Retail Trade Liberalization Act.